Spotlight on economy: Consumer spending seen edging up

Consumers might have increased spending in the fourth quarter by the fastest amount in three years, but what we really want to know is what they did in December.

The monthly report on consumer spending released Friday will tell us if most of the increase came in the first two months of the quarter or was spread out. Overall spending in the fourth quarter jumped 3.3%, the government said Thursday.

Why does it matter? A weak December number would suggest Americans scaled back at the end of the year. What’s more, it could be a sign of slower growth in the first quarter of 2014 if consumers really did turn cautious again.

Economists polled by MarketWatch forecast a 0.2% gain in spending, down from 0.5% in November. Personal income is seen rising a scant 0.1%.

The report is issued at 8:30 a.m. Eastern by the Commerce Department.

Another closely watched report, the University of Michigan’s consumer-sentiment survey, is expected to rise slightly.

Economists expect the gauge to tick up to a final January reading of 81 from a preliminary level of 80.4, making up some of the drop from December’s final reading of 82.5.

Weak data on jobs and rising gas prices cut sentiment levels this month for the University of Michigan/Thomson Reuters index. Economists watch sentiment levels to get a feeling for the direction of consumer spending.

The report will be released at 9:55 a.m. Eastern.

Also Friday, the employment cost index is projected to climb 0.4% in the fourth quarter and the Chicago PMI index is likely to slip to 59.8 in January from 60.8, according to the MarketWatch survey.